29 October, 2015
Following today’s release of the latest Insolvency Statistics by the Insolvency Service, Mike O’Connor, Chief Executive of StepChange Debt Charity, said:
“It is good to see bankruptcy and debt relief orders reducing, but the fact that overall insolvency levels are rising is a reminder that personal debt remains a persistent problem. A rise in IVAs is more likely to be due to volatility in the market as firms respond to Financial Conduct Authority (FCA) regulation, rather than any deeper structural change in the nature of debt problems in the UK.
“It is also important to remember that insolvency figures don’t reflect the full extent of problem debt. More than 600,000 people contacted us for debt advice last year and insolvency was the right option for just 20% of them.
“We need to focus on the root causes and solutions related to debt, not just the figures. We know from our research that 14m people suffered an income shock last year and nearly half of them used credit to cope. Better protections from temporary financial difficulty would help people get back on their feet quickly and prevent them from falling into problem debt.
“We also want to see the Government introduce statutory ‘breathing space’, with guaranteed freezes on interest and charges and a halt on enforcement action when people commit to taking action to tackle their debt.
“With credit markets loosening and creditors beginning to lend more freely, it is vital that we do not return to the high levels of unsustainable credit and the big boom in insolvencies we saw following the economic crisis.”